Boeing has seen 737 MAX customer demand recover briskly after two crashes and the COVID-19 pandemic battered the airline industry.

Chief executive Dave Calhoun said in October Boeing has “mitigated these existential moments.”

Boeing is expected to report an increase in fourth-quarter revenue to US$20.38 billion from $14.79 billion in the same quarter last year, with earnings of 26 cents a share, according to Refinitiv data.

However, analysts warn Boeing still faces major risk to increasing aircraft production, as supply chain recovery and additional regulatory requirements could delay schedules.

"It's not just a simple production recovery story," said Aerodynamic Advisory analyst Richard Aboulafia, who pointed to Boeing's backlog of hundreds of undelivered 737 and 787 planes sitting in storage.

Boeing plans to increase production of its flagship 737 MAX family of narrowbody airliners, which make up most of the company's sales volume, from 31 planes a month to about 50 by 2025.

Executives previously pointed to supply-chain bottlenecks as the major driver for lagging 737 MAX production, and investors will be listening for details about how many aircraft are expected to be manufactured and delivered this year.

Investors will also be looking for Boeing to shed light on why it is taking so long to deliver MAX planes sitting in storage.

The Federal Aviation Administration is still individually inspecting each MAX before it can be delivered.

"It does look like that is not progressing as quickly as they would like,” Vertical Research analyst Robert Stallard said.

The 787 Dreamliner program, which restarted deliveries in August after an 11-month pause, faces similar questions about its planned increase to 10 widebody planes a month by 2025.

Boeing aims to gradually grow production of the 787 to five a month, but slowed production after a December parts delay, Reuters previously reported.

In order to receive FAA approval to restart 787 deliveries, Boeing agreed to retrofit planes to meet certification requirements and submit those aircraft for FAA inspections ahead of delivery. Investors may question whether those requirements could potentially drive additional costs.

Boeing delivered 480 airplanes in 2022, trailing rival Airbus's 661. Both planemakers fell below analysts' expectations.

Over the first three quarters of 2022, Boeing racked up about $4.4 billion in losses on defense programs, with high manufacturing costs and labor shortages. Investors are skeptical Boeing can remain on cost and schedule in that business.

 

Future of 777X

In a separate development, Europe's chief aviation regulator pointed on Tuesday to a narrowing gap in talks with Boeing over cockpit design requirements for the future 777X airliner.

European regulators have been seen at odds with Boeing for more than a year over changes they want in flight controls of the latest version of the 777, a stand-off that has contributed to a cumulative five-year delay, according to industry sources.

"We are hopefully converging," Patrick Ky, executive director of the European Union Aviation Safety Agency (EASA) told Reuters, when asked about the progress of ongoing discussions on the 777X.

Boeing declined to comment. The US FAA did not immediately reply to a request for comment.

Ky's remarks come shortly after industry sources said the EASA held talks earlier this month with Boeing and the FAA to review certification expectations for the delayed jet.

Officially, the European agency takes a back seat to the FAA in certifying US airplanes. But the development of the world's largest twin-engine jetliner is widely seen as a test of the EASA's increasing influence following a crisis over the Boeing 737 MAX.

A major factor in two MAX crashes that killed 346 people was a single point of failure embedded in the flight controls.

Although the decades-old architecture at the core of the 737 is radically different from the electronic cockpit of the larger and newer 777, the EASA's approach reflects a sharper regulatory focus on safety backups in the aftermath of the MAX crisis.

The EASA has set out an approach that could prompt Boeing to add an extra fallback to guarantee that a single invisible failure within the cockpit's electronics cannot trigger simultaneous outages, a design precaution known as "dissimilarity".

Ky's comment could suggest some progress on the question of "dissimilarity", although it remains unclear how quickly outstanding certification questions will be resolved.

Industry sources say it has not been decided whether any new safeguards should be written into the 777X's flight control software or achieved as the result of hardware changes.

Boeing has warned regulators that having two systems provided by two separate suppliers running in parallel would risk new problems by adding complexity, the sources said.

US executives argue the 777 jet, which is being upgraded to create the 400-seat 777X, is one of the industry's safest.